by Dr. Michael Davis
December 17, 2014
Soon to assume the Texas governor position, from his prior office of Texas state attorney general, will be Greg Abbott. Mr. Abbott takes over the governor’s office from another dental industry failure, current Governor Rick Perry. Mr. Perry is most noted in dentistry for his dubious appointments to the Texas State Board of Dental Examiners (TSBDE). The consumer protection group, Texans for Dental Reform, have highlighted a number of these self-serving and corrupt appointments. Members of the TSBDE included a number of notorious Medicaid fraudsters, and at least one convicted sex offender.
Federal Fifth Circuit Ruling 07-30430
Let’s examine a case in point. Federal Fifth Circuit Court ruling 07-30430, which is largely based on Texas state statutes, determined that non-dentist ownership of a dental practice in Texas represents the unlicensed and unlawful practice of dentistry. The ruling further stipulates that corporate violators are to receive the same legal penalties, as individual person violators, with no special treatment. The acts of establishing doctor production quotas and bonuses are an action only lawfully permitted by a licensed dentist. State dental regulatory boards are charged under this federal ruling with the responsibility and obligation, of disciplinary actions against both individual person violators and corporate violators. The federal court also determined OCA (f/k/a Orthodontic Centers of America) could not enforce employment contracts with duly licensed Texas doctors, because the corporate entity OCA was not in fact a licensed doctor. The dentist employment contracts were determined unlawful and unenforceable, in their entirety, without being severable.
The federal court clearly saw though the sham presented by OCA (a dental service organization, “DSO”). OCA presented licensed dentists, whom they retained to misrepresent themselves as clinic “owners”. OCA controlled the dental clinics’ bank accounts. OCA held the power to buy and sell assets, such as the doctor employment contracts and individual clinics. In reality, these “owner dentists” were merely nominee owners. OCA, like nearly all DSOs, was the true and unlawful beneficial owner.
In conflict with this federal ruling —and further, avoiding addressing this ruling —the TSBDE has repeatedly stated they have no mandate to enforce the unlicensed practice of dentistry by a corporate entity. This flagrant obfuscation of law by legal counsel for the TSBDE is highly disturbing. Even more troubling is watching Rick Perry and Greg Abbott hide under their desks. Additionally, Mr. Abbott further abandoned his duty as Attorney General by failing to provide a legal advisory opinion based on clear and current legal precedence.
Xenith Practices, LLC & Austin Cosmetic Dentistry
Let’s examine another case, where Mr. Abbott was asleep at the wheel leaving dental consumers in harm’s way. In October 2014, Austin Cosmetic Dentistry simply closed and locked their doors. No notice of the closure was given to patients or staff. The staff was left unexpectedly unemployed and patients were illegally abandoned. Many patients were in the middle of their treatment. Many others, who had pre-paid, were scheduled to begin or finalize their restorations.
Representatives of Xenith Practices purchased the now-failed Austin Cosmetic
Xenith Practices, LLC, a DSO, managed the failed Austin dental clinic. Mr. R. Kirk Huntsman, —a business executive with no formal dental education and unlicensed to practice dentistry—formerly served as CEO of Xenith. As we shall see, Mr. Huntsman has quite the storied history in the dental industry. As for the true beneficial ownership of Austin Cosmetic Dentistry, that will be for the courts to sort out. It is alleged that Mr. Huntsman’s son-in-law—a Texas licensed dentist who lives and works in Colorado— signed on as the figurehead, “owner dentist”. Mr. Abbott could not have missed this obvious violation to Fifth Circuit ruling 07-30430, and negative fallout to the public health and safety.
Drs. Chris and Alisha Steiger have filed a civil complaint in Tarrant County Texas District Court (#352-275163-14) against R. Kirk Huntsman, Xenith Practices, et al. Plaintiffs allege among other pleadings, that their invested funds, as well as profits of the Burleson, Texas dental clinic in which they invested were unlawfully diverted by Mr. Huntsman and other defendants. These alleged acts of fraud are common for a failed dental service organization (DSO). Further, every regulator in the dental industry is fully aware of the risks to the public presented by DSOs, or certainly should be, inclusive of Greg Abbott and Rick Perry.
A prime example is the bankruptcy of Allcare Dental Management, Inc., in 2011. This DSO formerly operated in numbers of states in the Midwest and Northeast. One day the doors were open, and patients were treated. The next day, the doors were closed forever, and thousands of patients were abandoned. The individual doctor, in whom the patient trusted and relied, within the doctor/patient relationship (contract), was just another employee also locked out of the workplace. The true beneficial clinic owner was a corporate dental service organization, which directed patient care, unbeknownst to the patients. A third party had entered into the doctor/patient contract, without the knowledge or consent of the patients. Patients suffered because state regulators were unwilling to police the unlicensed and unlawful practice of dentistry, by corporations.
Xenith Practices, LLC operated a number of dental practices throughout Texas. The legal fallout is only beginning. R. Kirk Huntsman no longer affiliates himself, as CEO of Xenith. The company seemingly openly flaunted Texas statutes relating to dental practice ownership. Texas dentists were proffered the “opportunity” to co-invest with Xenith Practices, to “realize the same exceptional invest returns that have heretofore only been available to large private equity firms”. These dentist investors could benefit from “a number of ground-breaking new financial concepts”, as proposed by Xenith Practices, and CEO Huntsman. One is left to wonder, as the reality reads more like a bad movie screenplay from a dubious boiler room, penny stock sales operation. And, can anyone find Texas Attorney General Greg Abbott?
We know from public record exhibits submitted in the civil case in Burleson, TX, that Xenith Practices was structured with R. Kirk Huntsman as sole clinic manager. The report, “Confidential Private Offering Memorandum TXDP4, LLC Complete Dental Care” clearly shows the glaring fact, Mr. Huntsman as an untrained and unlicensed dentist, dictated the number of licensed staff in the clinics, their individual duties within the clinic and the care patients received. In addition, he was paid handsomely for his role as new dentist recruiter. It is very clear from the corporate structure, that all employees were subordinates of Mr. Huntsman, inclusive of retained doctors and hygienists. The absurd myth of DSOs remaining at arm’s length from decisions between doctors and patients was once again dispelled.
A patient should reasonably assume laboratory decisions (fabrication of dental crowns, bridges, etc.) are made between themselves and their dentist. This is part of the doctor/patient contract. Should a third party, collectively (i.e. a corporation) or individually intercede into that contract —without the consent or knowledge of the patient? Such action may render the doctor/patient contract unlawful. This action by a third party also represents the unlicensed practice of dentistry, as defined specifically in many state Dental Practice Acts. Further, because patients are at such a disadvantage with information and specialty knowledge—compared to doctors— courts have ruled that doctors must place the interests of patients to the forefront. The informed consent process is a patient’s legal right. This is not the buying and selling of widgets. Healthcare consumers have legal rights, which too often go ignored by regulators, in order to serve the interests of an outside few.
In the situation of the now-failed Austin Cosmetic Dentistry, evidence has come to light of doctors being pressured by Mr. Huntsman into using low-cost, low-quality dental laboratories, against the best interest of patients. When one doctor objected, and demanded in favor of serving the welfare of his/her patients, Mr. Huntsman attempted intimidation on his doctor/employee. In an email, to an employee dentist of Mr. Huntsman he stated: “If they (dental laboratory) don’t cooperate, we will have to find alternative labs who will deliver and provide terms. I don’t think you want to mess with that. If they don’t deliver the lab work (Note: Mr. Huntsman had not been paying lab bills, and this quality dental lab was fearful of a deadbeat clinic manager (beneficial owner)), then you cannot finish the cases you’ve started. That leaves you exposed as a provider. That’s not good either. Please call me to discuss. Thanks, Kirk Huntsman”.
Mr. Huntsman demonstrated a clear history in email correspondences with his employee doctors of intimidation, manipulation, as well as attempts to pit one doctor against another. Such unethical communication from an unlawful employer represents a potential serious deleterious impact on patient welfare. Doctors have nowhere to turn, to protect the interests of their patients, since the governor and attorney general were in tacit support of the abuses.
Another doctor also filed a formal complaint against R. Kirk Huntsman to the TSBDE, on January 16, 2012. The doctor referenced the Fifth Circuit ruling 07-30430. Among the violations cited was Mr. Huntsman’s alleged, “practicing dentistry without a license”. Over three months later, on March 26, 2012, the TSBDE finally reviewed and closed the case with a boilerplate finding of: “…there was not sufficient supporting documentation or evidence to warrant disciplinary action. Based on the above, it was determined that the case should be closed because there was no violation of the Occupations Code and/or the Board’s Rules and Regulations”.
The evidence submitted by this watchdog doctor serving the public welfare was overwhelmingly clear and convincing. The dental profession is indeed fortunate, to retain doctors willing and able to serve the public interest, even with the obstacle of corrupt and/or inept regulators. In generating this report, it only took the author a single day of investigation, to discover Mr. Huntsman had been interfering in doctors’ laboratory decisions to help their patients. This lone example represents the unlicensed and unlawful practice of dentistry, which the TSBDE was complicit in cover-up.
Corrupt Political “Fix” was in from the beginning-
In an email dated January 18, 2012, R. Kirk Huntsman stated the following, “… Of course I’m familiar with it (Fifth Circuit ruling 07-30430 relating to decisions on OCA), and not just superficially. Suffice to say that no knowledgeable, reputable law firm agrees with you. Nor does any state or federal regulatory agency, as indicated by their total and utter silence and inaction since the ruling came down. And if you think that Wall Street and private equity types are naïve enough to continue to invest hundreds of millions of dollars in an industry and a state in which they were in fact operating illegally, and where the regulatory risks were truly that high, then you grossly underestimate them.”
Additional History of R. Kirk Huntsman
R. Kirk Huntsman was also founder and former CEO of Nexus Dental Alliance, another Texas based company. The group targeted their sales to independent small business dentists. Their stated objective was to give independent dentists the tools, to compete with corporate-directed and beneficially owned DSO dentistry (which is unlawful in Texas, but unenforced by Greg Abbott or Rick Perry). Interestingly, Mr. Huntsman sees no conflict of interest by allegedly representing the interests of small business dentists on one day, and representing the interests of large chain corporate dentistry, on another day.
California dentist, Dr. Kianor Shah, owns copyrights to the name “Nexus Dental Alliance”, and clearly filed the initial trademark on this title. Dr. Shah has no current or past affiliation with Mr. Huntsman. In order to serve the welfare of the public, Dr. Shah developed business and professional concepts of independent dentists banding together to keep healthcare out of the hands of non-doctor private equity people, like Mr. Huntsman. Legal counsel representing Dr. Shah presented Mr. Huntsman notice, to discontinue infringing on his trademark property, and discontinue the unlawful use of the copyright name, “Nexus Dental Alliance”. Dr. Shah has expressed concerns of financial damage, that Mr. Huntsman’s trademark infringement may damage his brand standing, as well as his professional image.
One can only speculate as to Mr. Huntsman’s motives in brazenly usurping the trademark ownership of Dr. Shah. However, it may offer additional insight into the pattern of Mr. Huntsman’s character and business ethics.
Mr. Huntsman’s Relationship to Morgan Stanley
For an approximate 6-month period, starting in December of 2010, Mr. Huntsman served as CEO for ReachOut Healthcare America. This company—in the investment portfolio of Morgan Stanley—provides school-based mobile dental services, to primarily disadvantaged Medicaid children. ReachOut is most noted for making national media headlines in legal cases, for allegedly treating children without parental informed consent (in fact, the parents’ expressed denial for treatment), providing restorative care on non-carious teeth based on mix-ups in patients’ records, and unlawful restraint of children. This represented one more in a long list of reasons of why doctors, and not unlicensed corporations, should beneficially own dental clinics. All the while, Mr. Abbott continued his beauty sleep, as similar violations were happening in Texas; where he is charged with the responsibility of protecting the public from unscrupulous business practices.
Dental One
Some readers may have heard of the legal action brought against Dental Works (a/k/a Dental One, Inc., a/k/a Dental Care Partners), by the North Carolina State Board of Dental Examiners, in NC state superior court in 2013 (case 5:13-cv-00141-BO), which has since been remanded to federal court. Allegedly, Dental One, Inc.- a dental service organization- engaged in the unlawful practice of dentistry, by directing the care of licensed doctors, as an unlicensed entity. Under North Carolina statutes, similar to Texas and most other states, only a licensed dentist may direct patient care; not an unlicensed corporate party. R. Kirk Huntsman founded this company in 1995, when headquartered in Dallas. Where North Carolina authorities stood up against the unlicensed and unlawful practice of dentistry, Texas state authorities were complicit.
Dental One sold out to a private equity group in 2008. Mr. Huntsman stayed onboard until 2010, serving as President. Obviously, Mr. Huntsman has a long history with corporate-managed dental care, and the involvement of the private equity industry. Being this mammoth DSO was based in Dallas, Texas, one might reasonably assume the state’s chief law enforcement officer, Governor Rick Perry and state’s chief prosecutor, Attorney General Greg Abbott would be well aware of the alleged unlawful actions of Dental One. North Carolina took legal action, while Mrs. Abbott and Perry elected to rally for campaign money.
Other officers of Dental One included Dr. Edward Meckler, who in 1981 founded the first Sears Family Dental Center, and Doug Brown (non-dentist), who today serves as CEO of Affordable Care, Inc. (d/b/a Affordable Dentures). Mr. Huntsman had the opportunity to rub elbows with some fascinating (some might argue questionable) individuals.
AFTCO
R. Kirk Huntsman “cut his teeth” in the dental industry, starting in 1998 for over 7 years, with AFTCO Associates, in Dallas. AFTCO is a national dental practice brokerage business, with a multitude of franchises. They facilitate the purchase and sales of dental practices. However, AFTCO is unique in the industry. They purportedly represent both the buyer and seller, in the same transaction. For many, this represents an “in-your-face” conflict of interest. Whose interests are AFTCO brokers truly representing? Apparently, Mr. Huntsman was very comfortable in this role, which some would consider questionable business ethics. None of this should be lost on Greg Abbott.
Mr. Huntsman’s Future
One might assume Mr. Huntsman’s world is crashing in around him, as the dental practices he managed, and largely beneficially owned, are collapsing. Investors are loosing life savings. Employees are loosing their jobs. Patients are abandoned in mid-treatment, and are out serious amounts of personal money. Kirk Huntsman is not in hiding.
Mr. Huntsman is back at it, like the children’s game “Whack-A-Mole”. He’s created a new venture company in Texas, Ortho Ventures, LLC (a/k/a Orthovations). In the past 6-months, Mr. Huntsman has registered at least eight copyright names, focused on orthodontic dental care (braces). The nation earlier witnessed the Texas scandal of record-setting orthodontic dental Medicaid fraud. Perhaps we’ll see a repeat? Perhaps we’ll see another failed Orthodontic Centers of America? Regardless, this “Energizer Bunny” may have learned to register trademark names, and not outright steal them, as he did earlier. Or, did he?
Conclusion
By following the course of a single person’s career in the corporate dental industry, R. Kirk Huntsman, one witnesses the failures Greg Abbott and Rick Perry to effectively serve the public interest. As Texas attorney general, Greg Abbott gets a failing grade for allowing unlicensed corporations to control dental patient care. Governor Rick Perry similarly failed. Ignoring the precedence of federal law and selectively declining to enforce Texas state dental statutes has not served citizens well. Backroom powerbroker deals—as asserted by Mr. Huntsman himself—only generates further public cynicism towards government and elected officials.
As Texas governor, will Greg Abbott continue a policy started under Rick Perry, of crony capitalism, with big government supporting big business dentistry? Will government regulators continue to ignore statute enforcement, in order to serve the so-called “1%”? Will the interests of small business dentistry, and patient rights take a back seat to his big business (Wall Street & private equity) contributors? I wish I could be hopeful, but I’m not.
The one positive to come forth is that today we can attach a name and face, R. Kirk Huntsman to the murky world of private equity investment healthcare. We now have a DSO “poster-boy”. Troubling patterns, self-serving motivations, and disturbing political deals become clear. Blatant and abusive misrepresentations are made to investors, patients, the dental profession, and the general public. None of this unlawful activity would be possible, without the endorsement of elected officials such as Governor Rick Perry and Attorney General Greg Abbott.